The government’s voluntary Identity Ecosystem is an ambitious, but evolutionary step in securing online transactions and activities. However, it manages to fall short in circumventing fraudsters and raises the ire of privacy advocates. In contrast, device reputation and risk assessment, which uses device fingerprints to identify known fraud device reputations, focuses on recognizing and blocking the devices fraudsters use rather than the people themselves. This is an important point for the nefarious that don’t want to be identified, the paranoid that don’t want an online identity, and the rest of us whose personally identifiable information has been too easily compromised in the past.

With over 10 million Americans becoming victims of identity theft each year, solutions such as device reputation preserve the privacy for end users while still offering the fraud and abuse fighting benefits that strong systems require to protect their business and online users. As a result, devices can play a critical role in raising trust associated with online IDs and in the government’s plan for securing identities in online transactions and creating a trusted online environment. In order for the plan to be put into action, it will take time, but today there are many technologies already available that the government should consider for the underlying infrastructure that supports this national strategy.

iovation’s Device Reputation Authority (DRA) contains a plethora of information around devices, accounts, transactions, reports of fraud and abuse and more, all used to detect and prevent online fraud and abuse for businesses and their customers. It leverages customizable business rules, risk profiles, direct experiences with scammers as well as the experiences from the world’s leading online brands, all for the highest level of online fraud protection. iovation combines cross-vertical fraud prevention expertise with unmatched device recognition technology. This offering already protects over 300 major online brands from fraud and abuse today, such as financial fraud, shipping fraud, affiliate fraud, chat abuse, spam, scams and solicitations, identity theft, phishing, account takeovers, and more.

With a website devoted to the new campaign, it’s easy to take a quick look at some statistics about fraud in the UK, and some of them are quite frightening. While the information on the site is based on UK numbers, the concerns that those statistics raise are likely applicable in many countries, as identify theft is a world-wide problem.

A few stand-out numbers:

• £1.2 billion : The annual amount that identify fraud costs the UK economy
• 60,000: The approximate number of UK residents who have been a victim of identity theft in the current year. (Up 36% from the same time last year.)
• 36: The percentage of businesses that have no clear policy on how to dispose of documents including sensitive information (such as customers’ names, addresses, credit information, photocopies of passports, etc.)

As a whole, the site paints a clear picture: identity theft is a real problem with real consequences, which most people are aware of—and yet neither businesses nor individuals are, in great enough numbers, taking the steps required to prevent it from happening.

Here at iovation, we’re working on the other end of things: helping companies defend against online criminals using stolen identities to commit fraud. While businesses and individuals need to do more to prevent identity information from being stolen, it is also important for online companies to do everything they can to prevent criminals who are using those stolen identities. Unfortunately, most online businesses depend entirely upon information provided by the user, leaving them no way to know if, for example, 50 accounts, all set up with different names and addresses, are actually all coming from the same computer.

To do their part, businesses need to look at the different technologies, people, and processes that can complement core identity-based systems and expand the net to catch online fraud. For my part, I will be at the E-Commerce Expo next week in London to talk to online retailers about combating online fraud. Certainly this is a problem that businesses need to address together. Building national awareness of the problem and encouraging businesses to work together and share best practices is an important step to curbing this epidemic.

1. Provide visitors with instant feedback (or matches)
2. Convert visitors from “Just Looking” to “Paid Customers”
3. Deliver high quality connections or matches
4. Keep the quality of the prospect pool high, by weeding out scammers, spammers and fraudsters.

Number four is where iovation comes in.  When we compiled all incidents in our worldwide database from online dating sites that use our services, we found that the top 5 types of abuse on online dating sites are:

1. Identity mining/phishing &/or credit card fraud – 61%
2. Spammers – 14%
3. Profile Misrepresentation – 7.6%
4. General Misconduct – 5.9%
5. Solicitation – 2.9%

Computerworld launched a separate article on February 13th featuring iovation’s technology, titled, “Online Dating: Blocking the Bad Guys”.  Read this article to find out how iovation’s ReputationManager service aims to help online dating sites keep the scammers and spammers at bay.

- Scott Olson, VP of Marketing, iovation